Thirty-Year Fixed Rate Mortgage
The traditional 30-year fixed rate mortgage has a constant interest rate and monthly payments that never change. This may be a good choice if you plan to stay in your home for seven years or longer. If you plan to move within seven years, adjustable rate loans are usually cheaper. As a rule of thumb, fixed rate loans may also be harder to qualify for than adjustable rate loans. When interest rates are low, fixed rate loans are generally not that much more expensive than adjustable rate mortgages and may be a better deal in the long run, because you can lock in the rate for the life of your loan.

Fifteen-Year Fixed Rate Mortgage
This loan is fully amortized over a 15-year period and features constant monthly payments. It offers all the advantages of the 30-year loan, plus a lower interest rate and you'll own your home twice as fast.

The disadvantage is that, with a 15 year loan, you commit to a higher monthly payment. Many borrowers opt for a 30 year fixed rate loan and voluntarily make larger payments that will pay off their loan in 15 years. This is often a safer approach than committing to a higher monthly payment, since the interest rate difference isn't that great.

Hybrid ARM (3/1 ARM, 5/1 ARM, 7/1 ARM)
These increasingly popular ARMS - also called 3/1, 5/1 or 7/1 - can offer the best of both worlds. A lower interest rates (like ARMs) and a fixed payment for a longer period of time than most adjustable rate loans. For example, a "5/1 loan" has a fixed monthly payment and interest for the first five years and then turns into a traditional adjustable rate loan, based on then-current rates for the remaining 25 years. It's a good choice for people who expect to move or refinance, before or shortly after, the adjustment occurs.

Adjustable Rate Mortgages (ARM)
When it comes to ARMs there's a basic rule to remember...the longer you ask the lender to charge you a specific rate, the more expensive the loan.

2/1 Buy Down Mortgage
The 2/1 Buy Down Mortgage allows the borrower to qualify at below market rates so they can borrow more. The initial starting interest rate increases by 1% at the end of the first year and adjusts again by another 1% at the end of the second year. It then remains at a fixed interest rate for the remainder of the loan term.

Borrowers often refinance at the end of the second year to obtain the best long term rates, however even keeping the loan in place for three full years or more will keep their average interest rate in line with the original market conditions.

Annual ARM
This loan has a rate that is recalculated once a year.

Negative Amortization (Neg. Am) Loan
This is a deferred interest loan that is very powerful and the most misunderstood program because of its many options. Basically, the lender allows the borrower to make monthly payments that are less than the accruing interest. Therefore, if the borrower chooses to make the minimum monthly payment, the loan balance will increase by the amount of interest not paid on the loan.

The power is in the borrower's ability to choose either making the full loan payment, the minimum payment, or any amount in between. If a borrower's income varies throughout the year (commissions, bonuses, etc.), the borrower can make the lesser payment during the "lean times", and make the higher payment when funds are readily available.